The Big Story At This Year’s IMF Meetings
The annual IMF meetings are a key fixture in the calendar. The content of the conference is always fresh, always relevant, despite talk about the same old immutable forces that govern the tides of the global financial cycle.
It’s also a time when dealers meet other dealers, share information, cement new partnerships – and rivalries. That’s unusual, and often slightly unnerving for many bankers who can have an “us versus them” mentality. But the focus on cooperation is a refreshing change that reminds us we can achieve much by working together.
It’s fair to say that one theme above all others dominated the discourse at this year’s meetings: fintech.
From AI to blockchain, digital technology is reforming the financial services landscape, creating opportunities and challenges both in terms of inter-dealer collaboration and the way that banks serve their clients. I’m hearing from friends, former colleagues and current clients that there is an intense, even feverish focus on fintech right now amongst major dealers and issuers. Furthermore, given IMF’s mandate to promote the stability of the international monetary system, it’s taking a particularly keen interest, too.
In fact, fintech has risen to the highest echelons of finance, with global policymakers taking notice. Representatives from over 40 economies and transnational institutions met in DC to discuss the impact of technological change in the financial sector and potential policy and regulatory responses. IMF Managing Director, Christine Lagarde noted that, “There is a lot of excitement about Fintech […] We know that digital currencies, new models of financial intermediation and artificial intelligence will change the way we do our job”.
This is no flash in the pan. It’s a sign that the business of financial services is evolving, and data has become the most valuable commodity on the planet. A technological arms race between dealers seems inevitable, as the market becomes more comfortable with new technologies like blockchain, AI and machine learning.
But there are positive signs that financial institutions are working together to drive innovation and improve the customer experience, R3’s efforts with distributed ledger technology being one of many examples. Issuers and banks have been coming together too, to drive efficiency in the capital markets. Here at Origin, we’re proud to help facilitate that trend.
With all of this talk of big data, scalability and optimisation, we risk forgetting that finance has always been fundamentally technological. Ever since the invention of the clay tablet and the abacus, innovative people have been creating ground-breaking technologies to gather, analyse and share data more effectively. What changed is that the pace of innovation has accelerated, forcing everyone to sit up, take note and invest in order to compete – and avoid behind left behind.
Startups are benefitting from this strong demand amongst incumbents to drive innovation. Indeed, fintechs in the UK are on track to attract a record amount of investment in 2017 – more than $1bn (£760m) and more than double the amount invested a year ago – confounding concerns that Brexit could derail the star sector.
There are many regulatory and legal hurdles for banks to navigate along the way, with MiFID II and the EU’s General Data Protection Regulation. The emerging field of reg-tech has a part to play in making compliance cheaper and easier to manage.
Banks are investing billions in digital transformation. One of Origins partners, BNP Paribas, is leading the charge in this regard. At the heart of its plan is a mission to optimise the way that data is collected, stored and delivered to staff, empowering them to improve the customer experience. More on that next week, when we’ll be sitting down with Andrei Serjantov, the bank’s Global Head of Electronic Primary and Credit Markets. Until then.